How To Sue An Insurance Company?

You have the right to sue your insurance company if they break or fail to follow the conditions of the policy. Not paying claims in a timely manner, not paying claims that have been properly filed, and making bad faith claims are all examples of common infractions.

Fortunately, there are numerous rules in place to protect consumers like you, and it is not uncommon for a policyholder to file a lawsuit against his or her insurer.

It’s difficult enough to deal with property loss, injuries, the death of a loved one, or any other calamity. It’s easy to feel overwhelmed when you have to fight your insurance provider on top of everything else.

Continue reading to discover the basics of filing a lawsuit against your insurance company for refusing your claim or other wrongdoing.

How do you fight an insurance company?

  • Step 1: Get in touch with your insurance agent or firm once more. You should study the claim you originally made before contacting your insurance agent or home insurance company to contest it.

Can an insurance company refuse to pay out?

You will almost certainly be involved in an automobile accident at some point in your life. It could be your fault or the fault of the other motorist. When the other driver is at fault, his or her insurance company should pay for your medical bills, as well as repair or reimburse you for the worth of your car so you can replace it. Unfortunately, if you have a good claim and the other driver’s insurance company refuses to pay, you will need to pursue it or hire an insurance attorney. Some insurance companies take a long time to pay out compensation, but the issue will be resolved soon. Other insurance companies, on the other hand, may deny the claim and refuse to pay. The methods listed below can be used to persuade the insurance company to pay and resolve the claim.

How long does an insurance company have to investigate a claim?

The insurance company has roughly 30 days to investigate your claim in most cases. The statutes of limitations in your state will also impact how long you have to file and settle a lawsuit.

Suing an Insurance Company for Negligence

Negligence is defined as a failure to act or comply with the requirements of a legal agreement from a legal standpoint. You may be able to sue an insurer for gross negligence, which is defined as a failure to act that leads to a disregard for safety.

If your insurance acted or failed to act in a way that caused you harm, you can sue them for negligence or gross negligence:

  • You can claim for negligence if your insurance agent fails to offer the coverage you requested or fails to advise you of your options.
  • If your insurance company neglected to explain or misrepresented about what your policy covers, you could file a negligence case. You might claim for deception if they lied about your coverage.
  • If your insurance fails to fulfill its obligations, you might initiate a negligence case. It can include not responding to a claim or appeals letter or failing to perform a thorough inquiry.
  • You could claim for negligence if your insurance provider failed to warn you that they were going bankrupt or that your coverage was about to expire.

Why do insurance companies reject claims?

The most prevalent reason for claim denial is incorrect or missing information. The theory is simple: personal facts such as age, career, health condition, medical history, and so on determine the premium and risk coverage. The claim could be refused if the employer verifies the details and finds any deception. As a responsible consumer, it makes sense to offer accurate information in the insurance form, such as any pre-existing medical conditions, to avoid claim denial in the event of death due to that disease alone. It’s possible that the insurance company entered an incorrect detail by accident, so examine the policy documents as soon as you get them and notify the insurance company if there are any discrepancies.

Lapse in Policy

The coverage will lapse if the premiums are not paid by the due date. Insurance firms also give policyholders a grace period if they are unable to pay their premiums within the set time limit for whatever reason. If the policyholder fails to pay even after the grace period, the policy will lapse. The policy claim is usually only accepted if the policy is still active and has not lapsed owing to late or non-payment of premiums. Even though firms send messages and emails reminding policyholders to pay their premiums on a regular basis, it is a good idea to set your own reminders for premium payment and policy continuance.

Not Appointing or Updating Nominee Details

In India, insurance goods are seen as mandatory rather than necessary. As a result, we only acquire them to fulfill a contractual requirement, such as a tax savings or a penalty for not purchasing insurance. As a result, the policyholder does not fully comprehend the claim process and fails to appoint or update a nominee. Most of us, for example, receive our first insurance policy within a few years of starting our first work. The nominee in these insurance is usually the policyholder’s parent or mother. These facts are not updated in the event of the death of the policyholder’s parents or after the policyholder’s marriage. If a claim is filed, there’s a good chance it’ll be rejected since the appointed nominees may no longer be available, and the company won’t be able to figure out who to pay. As a result, the policyholder should update the nominee information as soon as there is a major change in the previous nominee status.

Can you sue an insurance company for taking too long?

Under California law, insurance companies are held to a high standard. According to the California Code of Regulations, insurance companies must respond to a benefit claim within 15 days and approve or deny the claim within 40 days. Insurers can break the legislation mandating a fast response to claims by violating these time limits, but there are many more subtle ways that insurance firms avoid paying claims by delaying payment. Insurers frequently demand inexhaustible evidence or the filing of many, redundant forms. They can say that a form you already filled out was misplaced in the mail. Before approving a claim, they may pretend that they are awaiting a doctor’s opinion on your situation. All of these tactics, when applied tactically, can amount to a breach of your legal rights.

In California, every contract has an implied commitment of good faith and fair conduct between the parties. If an insurer acts irrationally by delaying a response to a claim, the customer may be able to sue for money damages if the delay caused them harm. Furthermore, California Insurance Code 790.03 stipulates that failing to act “reasonably promptly” while responding to consumer interactions, reviewing and processing claims, or paying claims is an unfair business. A experienced insurance bad faith lawyer will use these and other laws, as well as a comprehensive examination of your case and evidence of your right to the benefits requested in your claim, to recover the money damages you’re owed for your insurer’s bad faith in delaying your claim’s response.


(NASDAQ: ALL) – Allstate is at the top of the list for greed and prioritizing profit over policyholders. Contracting with consulting firm McKinsey & Company in the mid-1990s was one of its nefarious techniques. Allstate was assisted by McKinsey & Co. in forcing consumers to accept lowball claims. Consumers who refused to use this procedure were subjected to the insurer’s “fighting gloves,” an aggressive policy of denying insurance claims at any costs. According to the AAJ investigation, supervisors ordered agents to mislead and blame fires on arson, according to a report from one Allstate employee. As a reward for their efforts, Allstate agents who participated got portable refrigerators.


UNM (NYSE: UNM) is a publicly traded company based in New Mexico. Unum, a disability insurance company, has a scenario that exemplifies its behavior and disrespect for the disabled: for three years, it denied the claim of a lady with multiple sclerosis, claiming that her symptoms were “self-reported,” despite doctors’ evaluations to the contrary. Unum reached a settlement with insurance commissioners from 48 states in 2005 for their business practices.


When you buy or renew an insurance coverage, you have a legal obligation to disclose pertinent information. The insurer may be able to deny your claim if you did not supply correct or complete information at the appropriate time.

There are two ways that you are required to disclose information:

  • When you have knowledge of, or should reasonably have knowledge of, facts that would be significant to the insurer’s decision to accept the policy.

You are not required to disclose:

The Insurance Contracts Act 1984 (Cth) places restrictions on when your claim can be dismissed due to disclosure:

  • The insurer has a responsibility to make you aware of the nature and consequences of your duty to disclose. They can’t decline a claim based on your non-disclosure if they haven’t done this.
  • If you neglected to disclose something when you first purchased the policy or when it was renewed, the insurer cannot deny your claim unless it can establish that it would have refused to insure you if it had known the missing information…
  • If, for example, the insurer would have offered you insurance coverage if it had known about your recent claims history, but would have paid a higher premium, the insurer cannot reject you because you did not disclose your recent claims history (although it can still require you to pay a higher premium). Obtaining a copy of the insurance company’s underwriting rules is the only method to determine if the insurer would have proceeded with the insurance. This may be something that insurers do not want to undertake. If this is the case, you should file a complaint with AFCA, which will demand proof from the insurer that it would not have supplied you with insurance coverage in the first place.
  • If you fail to tell the insurer of an event that occurred during the policy’s term of coverage, the insurer can only decline or reduce your claim if it can demonstrate that it was harmed by your failure to disclose.

The insurer bears the burden of establishing that a non-disclosure permits the insurer to decrease or refuse your claim.

So, if your claim has been refused on the basis of non-disclosure then you need to:

  • Write to the insurance and inquire as to what information was withheld. You could claim that you did reveal the missing information, or that it was fair in the circumstances not to disclose due to whatever the insurer did or did not ask or tell you.
  • If you failed to disclose the information, request a copy of the insurer’s underwriting standards to determine if it would have supplied you with insurance coverage if you had disclosed the information.
  • If the insurer does not react promptly or fails to provide you with a copy of the underwriting rules, file a complaint with AFCA before the time restriction expires.

REMEMBER: When you call to purchase an insurance coverage, the call is frequently recorded. As a result, the insurance company will frequently have extensive evidence of what was spoken at the time. Within 14 days, the insurer must deliver you your policy information in writing, which will normally include a summary of what you have disclosed for you to review and modify if necessary.


Conditions and exclusion clauses are common in insurance contracts. The following are some examples of conditions:

If you do not comply with a condition, the insurance may deny your claim. Section 54 of the Insurance Contracts Act, on the other hand, says that an insurer cannot refuse to pay a claim because of an act or omission on your part unless the insurer’s interests are jeopardized. For example, if you fail to have keyed locks on all windows and a thief breaks in by smashing one or knocking down the front door, you may be able to argue that your failure to install or maintain the window locks did not prejudice the insurer because it did not contribute to the loss or damage suffered as a result of the break in.

Exclusions are common in insurance policies. A condition or incident that is not covered by the policy is referred to as an exclusion. The following are some instances of occurrences that may be excluded:

To rely on an exclusion provision, the insurer must show that the exclusion clause applies on the balance of probability. In some situations, the insurer may be required to fully explain the exclusion to you, albeit this does not have to be done in person. It’s generally enough to provide this information on the paperwork you received when you signed up for the coverage.


Most insurers either do not cover flood damage or severely limit the circumstances in which they will pay. The law distinguishes flood damage from damage produced by precipitation or stormwater, which is rain that collects on the ground due to the severity of a storm.

The Insurance Contracts Regulations 1985 (29D) give the following definition of “flood”:

Flooding is defined as the engulfment of ordinarily dry land by water that has escaped or been released from the customary constraints of one or more of the following:

If your claim is denied because the insurance claims the damage was caused by flooding, you should seek legal assistance because:

  • When a large number of people are harmed, the insurance may agree to pay the claim anyway.
  • If both rainwater and flood caused the damage, you may still be able to get your claim settled if the rainwater entered your home first or the damage was caused by rainwater coming through a hole in the roof (even if floodwater entered the house as well).
  • The law of “proximate cause” applies if the water that entered your residence and caused the damage was a combination of floodwater and rainwater. This means you are completely unprotected (even if the water was half rainwater). According to the doctrine, if harm is caused by two sources within the insurance, one covered and one excluded, the insurer is not required to pay the claim.


Insurers frequently dismiss claims, claiming that the damage was caused by a pre-existing property problem (for example, that the roof let water in because it was poorly constructed). You can use Section 46 of the Insurance Contracts Act to argue against this. The insurer cannot dismiss a claim if you were uninformed of the flaw when you entered the insurance contract (and a reasonable person in the circumstances would not have been aware of it). Unfortunately, a case ruling has narrowed the scope of this section’s interpretation. Seek legal counsel.


“Wear and tear” and damage caused by a failure to maintain the home are frequently excluded from insurance policies. A storm, for example, could cause your roof tiles to fall off. If your house is ancient and the tiles need to be replaced regardless because of their age, the insurer may refuse to pay the claim. Insurance coverage are not a replacement for poor property maintenance. If your insurer denies your claim due to wear and tear, you should try to obtain the following evidence:

  • Evidence showing the damage was caused by a storm or other covered event under the insurance policy.


Fraud is a serious charge, and the insurer bears the burden of proof in proving the claim. Check out our fact sheet: What options do I have if I’m being investigated for fraud?

The insurer must prove that you intended to deceive the insurer or behaved with reckless indifference to whether or not the insurer was deceived in order to establish fraud.

If the insurer discovers fraud, it has the right to deny your insurance claim and cancel your policy. This means you are no longer covered by insurance. In significant circumstances, the police may be called in to investigate, and you may be charged with a crime. If the deception was modest, the insurer could not rely on it, therefore it would be unjust to deny the claim.

The insurers have agreed to solely use “relevant facts” when deciding on your claim under section 7.3 of the General Insurance Code of Practice. This can be construed in a variety of ways in the context of fraud. If you believe the information asked is excessive or irrelevant, and/or the inquiry is taking too long, you should contact the insurer. Try to be forceful without being unpleasant or aggressive, as this will just irritate the insurer and/or the investigator.

  • If the investigator is recording your interview, request a digital copy of the interview or transcript.

In the AFCA, any disputes involving allegations of fraud are decided by a Referee. The Referee may ask you or the insurer for additional information and, if necessary, examine you or other willing witnesses in person.


Insurance firms have been known to cancel policies in the middle of the coverage period. This could happen if you submit extra information that raises the insurer’s risk to an unacceptable level. Another extremely common explanation is that you have not paid the policy’s premium. This is especially likely if you chose to pay your premium in installments via direct debit and your direct debit was unsuccessful.

If your insurer informs you that your policy has been terminated, you should get legal assistance to determine whether they had adequate grounds to do so and if they followed all legal requirements in informing you of the cancellation. You can file a complaint with AFCA if you disagree with their decision to cancel the policy or believe they did not properly notify you of the cancellation.